Office of Labor-Management Standards (OLMS)
U.S. Department of Labor
Employment Standards Administration
Office of Labor-Management Standards
Philadelphia District Office
1705. Independence Mall West
Philadelphia, PA 19106
(215)861-4818 Fax: (215)861-4819
August 26, 2008
Mr. Wayne Cox, Business Representative
Graphic Communications, IBT
2 West Baltimore Avenue
Clifton Heights, PA 19018-2201
LM File Number 029-172
Case Number: ----------
Dear Mr. Cox:
This office has recently completed an audit of Graphic Communications Local 4 under the Compliance Audit Program (CAP) to determine your organization's compliance with the provisions of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As discussed during the exit interview with accountant Robert Hornick and you on August 14, 2008, the following problems were disclosed during the CAP. The matters listed below are not an exhaustive list of all possible problem areas since the audit conducted was limited in scope.
Title II of the LMRDA establishes certain reporting and recordkeeping requirements. Section 206 requires, among other things, that labor organizations maintain adequate records for at least five years by which each receipt and disbursements of funds, as well as all account balances, can be verified, explained, and clarified. As a general rule, labor organizations must maintain all records used or received in the course of union business.
For disbursements, this includes not only original bills, invoices, receipts, vouchers, and applicable resolutions, but also documentation showing the nature of the union business requiring the disbursement, the goods or services received, and the identity of the recipient(s) of the goods or services. In most instances, this documentation requirement can be satisfied with a sufficiently descriptive expense receipt or invoice. If an expense receipt is not sufficiently descriptive, a union officer or employee should write a note on it providing the additional information. For money it receives, the labor organization must keep at least one record showing the date, amount, purpose, and source of that money. The labor organization must also retain bank records for all accounts.
The audit of Graphic Communications Local4's 2007 records revealed the following recordkeeping violations:
1. Failure to Maintain Bank Records
Local 4 failed to maintain two deposit slips for dues receipts deposits. Deposits of $5,364.18 on January 30, 2007 and $1,302.10 on April 26, 2007 were noted on the Reconciliation of Bank Statement for the appropriate months. However, the deposit slips were not retained. Deposit slips are part of bank records and must be retained for all accounts.
2. Lack of Disbursement Documentation
Local 4 failed to maintain adequate records to verify, explain or clarify, disbursements made during the audit year. Specifically, Local 4 did not have any bills, invoices, receipts for travel expenditures including credit card charges, payments for rent and the Local's attorney. For example the following disbursements were made and no back-up documentation was retained: House Call Computer $762.34, Kennedy Printing $872.05, We Screen Printing $420, Quill Screen and Supplies$244.09, -------------- (Arbitration) $1,653.57 and -------------- (Arbitration) $1,827. As stated above, receipts and invoices are required to be retained for disbursements.
3. Credit Card Expenses
Local 4 did not retain adequate documentation for credit card expenses incurred by President Brian Crosson totaling at least $515, Recording Secretary John Foster totaling at least $545, Business Representative Wayne Cox totaling at least $515, and Trustee Larry Stroup totaling at least $612. Additionally, no receipt or bill was retained for a $257 charge at the Crowne Plaza Hotel in Philadelphia for a room, food and beverages when a union meeting was held on September 17, 2006. During the audit OLMS verified the union purpose for all of the above expenses.
As previously noted above, labor organizations must retain original receipts, bills, and vouchers for all disbursements. The president and treasurer (or corresponding principal officers) of your union, who are required to sign your union's LM report, are responsible for properly maintaining union records.
4. General Reimbursed Expenses
Local 4 did not retain adequate documentation for expenses incurred by union officers and employees totaling at least $6,674.97. For example Business Representative Wayne Cox received $1,408.20 for travel expenses relating to an IBT Newspaper Conference held in St. Petersburg Beach, Florida, a GCIU Newspaper Convention held in San Francisco, California and strike expenses. Recording Secretary John Foster, Trustee Pete McGarvey, Trustee Larry Stroup and President Brian Crosson received $1,713.71, $1,126.80, $1,510.34 and $915.92 respectively for travel expenses relating to a Teamsters Convention in Las Vegas in June 2006 and a GCIU Newspaper Convention in San Francisco in August 2006.
As previously stated, labor organizations must retain original receipts, bills, and vouchers for all disbursements. The president and treasurer (or corresponding principal officers) of your union, who are required to sign your union's LM report, are responsible for properly maintaining union records.
Based on your assurance that Local 4 will retain adequate documentation in the future, OLMS will take no further enforcement action at this time regarding the above violations.
The audit disclosed a violation of the LMRDA Section 201(b), which requires labor organizations to file annual financial reports accurately disclosing their financial condition and operations. The Labor Organization Annual Report (Form LM-2) filed by Local 4 for fiscal year ending May 31, 2007, was deficient in the following areas:
1. Disbursements to Officers and Employees
Local 4 did not include some reimbursements to officers and employees totaling at least $12,799.97 in Schedule 11 (All Officers and Disbursements) and Schedule 12 (Disbursements to Employees). It appears that the local erroneously reported these payments in Schedules 15 through 19.
The union must report in Column F of Schedules 11 and 12 (Disbursements for Official Business) direct disbursements to officers and employees for reimbursement of expenses they incurred while conducting union business. In addition, the union must report in Column F of Schedules 11 and 12 indirect disbursements made to another party (such as credit card company) for business expenses union personnel incur. However, the union must report in Schedules 15 through 19 indirect disbursements for business expenses union personnel incur for transportation by public carrier (such as an airline) and for temporary lodging expenses while traveling on union business. The union must report in Column G (Other Disbursements) of Schedules 11 and 12 direct or indirect disbursements to union personnel for expenses not necessary for conducting union business.
2. Itemized Disbursements in Schedule 18 (General Overhead)
Local 4 did not properly report several transactions in Schedule 18 (General Overhead). Disbursements totaling $491 were listed on the itemization page as payable to "Platinum Plus." Payments to credit card companies must be allocated to the recipient of the payment of the disbursement and not the credit company. In additional payments to "miscellaneous" appear in Schedule 18 which is not adequately explanatory. It should also be noted that only "major disbursements" need to be itemized. A "major" disbursement includes any individual disbursement of $5,000 or more or total disbursements to any single entity or individual that aggregate to $5,000 or more during the reporting period.
3. Itemized Disbursements in Schedule 19 (Union Administration)
Local 4 did not properly report two disbursements in Schedule 19 (Union Administration). Disbursements totaling $12,625 were listed on the itemization page as payable to "various union members" and Vince Aurillio. "Various union members" is not adequately explanatory. It should be noted that only "major disbursements" need to be itemized. Additionally, employee Vince Aurillio received ten payments of $650 for organizing. Disbursements made to an employee must be reported in Schedule 12 (Disbursements to Employees).
4. Officers Not Report in Schedule 11 (All Officers and Disbursements to Officers)
Local 4 did not properly report all its officers in Schedule 11 (All Officers and Disbursements to Officers). Recording Secretary John Foster and disbursements he received were not reported in Schedule 11. All the labor organization's officers, salaries and other direct and indirect disbursements its officers during the reporting period to include the percentage of time spent by each officer in the categories provided in Schedule 11 should be reported.
5. Failure to File Bylaws
The audit disclosed a violation of LMRDA Section 201(a), which requires that a union submit a copy of its revised constitution and bylaws with its LM report when it makes changes to its constitution or bylaws. Local 4 amended its bylaws in January 2000, but did not file a copy with its LM report for that year.
Local 4 has now filed a copy of its constitution and bylaws.
Local 4 agreed to file an amended Form LM-2 for fiscal year ending May 31, 2007 to correct the deficient items discussed above. I discussed with you the availability of the reporting forms and instructions on the OLMS website (www.olms.dol.gov). The amended Form LM-2 should be submitted through the OLMS website as soon as possible, but not later than September 26, 2008. Before filing, review the report thoroughly to be sure it is complete, accurate, and signed properly with digital signatures.
The audit disclosed the following other violation:
Local 4's officers and employees are currently bonded for $22,500, but they must be bonded for at least $41,000. Local 4 should obtain adequate bonding coverage for its officers and employees immediately. Please provide proof of bonding coverage to this office as soon as possible, but not later than September 26, 2008.
I want to extend my personal appreciation to Graphic Communications Local 4 for the cooperation and courtesy extended during this compliance audit. I strongly recommend that you make sure this letter and the compliance assistance materials provided to you are passed on to future officers. If we can provide any additional assistance, please do not hesitate to call.
cc: Brian P. Crosson, President